The decision to finance equipment must address one key decision: new or used?
Every business owner evaluates the pros and cons of new versus used equipment. But, every business owner isn’t an equipment financing expert.
To help in making the decision of whether to buy new or used equipment, we turned to other business owners and equipment financing experts for guidance.
Here’s what they had to say about new vs. used business equipment financing.
Low Financing vs. Overall Less Expensive
This is up to the business owner. Sometimes if you purchase new equipment, the manufacturer will offer 0% down or very low financing. The benefit is new equipment at a very low financing cost. Used equipment has its own benefits as well. It’s likely going to be much cheaper than new equipment and even though the financing cost will likely be higher, the savings between buying new vs. buying used could outweigh the financing cost.
Carey Wilbur, Charter Capital
Consider Safety Aspects
Consider any and all safety aspects of the equipment including regulations your company may be required to follow. If it is safer to obtain new equipment, such as vertical transportation like an elevator or lift, then that is the smart choice. However, used equipment may be sufficient for other purposes if you are looking to cut expenses.
Pete Newstrom, Arrowlift
Length of Time
Consider the length of time that you will need the equipment. The longer you will need it, the higher the likelihood that you will require new equipment. Though there are always exceptions. The opposite is also true–the shorter you will need the equipment, the more that used equipment will likely fulfill your needs.
Rex Murphy, American Pipeline Solutions
Determine the Purpose of the Equipment
Consider whether new or used equipment will satisfactorily meet your needs in terms of safety, useful life, and quality. There isn’t a clear answer to this question, so you must understand that each choice has its own pros and cons. If you need equipment solely to get the job done, used equipment could be your ideal choice to cut costs, but safety standards change frequently and may require the financing of new equipment instead.
Peter Babichenko, Stomadent Dental Lab
Account For The Unexpected
I purchased new Herman Miller Aeron chairs for our entire office last year. The purchase was the largest investment in equipment that we made as a company. Flash forward a few months after the purchase, and we go remote for the foreseeable future. After that experience (and selling several of our new Aeron chairs on OfferUp), I’ll always consider used equipment first before new equipment. Account for the unexpected when considering new versus used equipment.
Brett Farmiloe, Markitors
Ask For Money Back Guarantee
European Denture Center operates one of the largest denture laboratories in the state of Idaho, allowing us to provide our patients with a selection of state-of-the-art dental materials. Each of our appliances comes with a money-back guarantee, which means that investing in new equipment is critical to making sure we are offering dental appliances made using the latest dental technologies and materials. If you base a business on the quality of products, then financing new equipment typically tends to have more “pros” than investing in used equipment.
Henry Babichenko, DD, European Denture Center
Consider the ROI
How long will it take for the equipment to pay for itself? Is the equipment essential to business operations, or is it merely an accessory or a convenience? It also depends on the level of risk you are taking. If your business is experimental, you may want to consider leasing equipment until you are established.
Anna Caldwell, Accredited Debt Relief
Older Equipment is Difficult to Have Serviced
I prefer purchasing brand new equipment because even if it comes with a higher price tag, it is worth the expense in many circumstances. Your business should consider certain options for buying new equipment:
- Older equipment is difficult to find parts for or have serviced
- The new equipment will deliver a strong return on investment
- The equipment will suit a range of requirements
- An extended warranty is available
- You know the product will be reliable and long-lasting
Bryan Kesler, CPA Exam Guide